J BS USA
plans to sell Five Rivers Cattle Feeding to Pinnacle Asset Management, L.P.,
for approximately $200 million. Pinnacle Asset, an investment firm
specializing in commodities and natural resources, made the announcement on Jan. 17 in a press
release.
Five Rivers Cattle Feeding includes 11 feedlots and has a total
feeding capacity estimated at 980,000 head of cattle, making it the largest
cattle feeder in the world. The feeding operation traces its roots back to the 1920s with the Monfort
family and now has yards in Arizona, Colorado, Idaho, Kansas, Oklahoma and
Texas.
As part of the purchasing agreement Five Rivers Cattle Feeding
will continue to supply cattle to JBS USA's beef processing plants. The current
Five Rivers management team is to remain intact, with president and CEO Mike
Thoren staying in his lead role.
“The sale of the Five Rivers Cattle Feeding assets and farms is
a strategic move that will allow JBS USA to more efficiently deploy working
capital and focus on the company’s core food and value-added products
businesses,” said Andre Nogueira, CEO of JBS USA.
Representatives affiliated with Pinnacle Asset voiced their
pleasure with the agreement.
“The acquisition of the largest and most respected cattle
feeding operation in the world continues Pinnacle's strategic path of
investment and development of our diversified, global, physical commodity
platform, of which livestock is a critical sector,” said Jason M. Kellman,
managing partner and Chief Investment Officer of Pinnacle Asset Management. “We
are excited to work closely with our operating partner, Arcadia Asset
Management and strategic partner, Ospraie Management to support Five Rivers’
talented management team.”
“Ospraie is pleased to partner with Pinnacle and Arcadia on this
market-leading, commodity transaction,” said Jason Mraz, president of Ospraie
Management, who is a strategic partner to Pinnacle on this transaction. “We
have a long history of working together and have great respect for both
partners’ expertise in physical commodities.”
“We are excited to combine Arcadia’s livestock marketing and
risk management experience with the first-class management team at Five
Rivers,” said Jordan Levi, managing member of Arcadia Asset Management, LLC.
“We believe that the complementary strengths of Pinnacle, Arcadia, Ospraie and
Five Rivers will create significant value. We look forward to continuing the
legacy of best-in-class production, livestock care and animal welfare, and
environmental stewardship established by the more than 600 skilled professionals
who comprise the Five Rivers Cattle Feeding team.”
JBS’s sale of Five Rivers Cattle Feeding is part of a divestment program that was
announced last summer. As part of the divestment plan JBS also sold off Five Rivers Cattle Feeding
in Canada which included a 75,000 head feedlot and sold for
nearly $40 million.
According to Nogueira the transaction completes the company’s
divestment plan.
“The long-term partnership with Pinnacle will ensure JBS USA’s
continued ability to produce high-quality beef products, including natural,
certified humane, raised without antibiotics, source-verified and traditional
products, enjoyed by customers and consumers around the world,” Nogueira said.
The acquisition is still pending a U.S. regulatory review and
approval, along with approval from the JBS S.A. Board of Directors and
Pinnacle Asset securing the relevant funding.
Until the sale is approved JBS Five Rivers will continue to
operate as usual. JBS USA will also maintain purchasing agreements with
feedlots associated with Five Rivers Cattle Feeding.
This is the second major shakeup to a large U.S. packer-feedlot
operation in the past year. In April 2017, Cargill sold its two remaining
feedlots to Green Plains Inc. If the sale of Five Rivers is
finalized it would mean that none of the three largest beef packers (JBS, Tyson
Foods and Cargill) have ownership of a cattle feeding operation.